Introduction

This literature review is for assessment purposes and in partial fulfilment of the interdisciplinary project which includes the courses of Data Analysis, Marketing Research, Strategic Marketing and Consumer Behaviour. This literature review will define and discuss market segmentation and positioning as well as ethics and social responsibility. This literature review is derived from research of scientific articles.

For an extended amount of time, market segmentation has been, according to Wind (1978), “considered one of the most fundamental concepts of modern marketing”. The fact that market segmentation is so fundamental makes it a very relevant and important topic to explore. To further emphasize the importance of market segmentation, Sheth (1987 cited in Tynan and Drayton, 1987) has mentioned it as an absolute “essential to marketing”

Brand positioning is also an import activity in the marketing world. According to Urban and Hauser (1993), “positioning is critical for a new product”. With brand positioning, a business attempts to establish a maintainable competitive advantage on tangible and intangible product characteristics within the view of the consumer (Gwin & Gwin, 2003).

Ethics regarding all facets has been a topic that is getting explored and theorized more. To support my previous statement, Malhotra (1998 cited in Sagar et al, 2006) has stated that over the last decades, a cumulative quantity of care has been dedicated to ethics particularly but not limited to marketing.

Discussion

Segmentation:

As defined by Smith (1956), market segmentation encompasses observing heterogeneous markets as a collection of littler homogeneous markets, as an answer to varying preferences, in co-ordination with the wishes of consumers in hopes of a more targeted satisfaction of their fluctuating desires. Furthermore, Cui (2015) states that segmentation is the procedure in which a consumer market is differed into minor submarkets.

There has been a common sense of displeasure with segments led solely by demographic and geographic factors which led to the use of psychological and psycho-graphic variables abundantly adding to the factors to take into consideration when predicting consumer behaviour. Marketers segment consumers by geographic, demographic, psychological and psycho-graphic variables (Tynan & Drayton, 1987).

The market segmentation strategy is extremely useful to marketers as it acknowledges that consumers have different desires, preferences, approaches, attitudes and motivations in regard to products and services (Tynan & Drayton, 1987). It is stated by Baker (1984) that the notion of market segmentation leans on the acknowledgment of segregated demand for a product however its function, as a marketing tool, rests on the classification of the most suitable variable/s with which to divide the overall demand into revenue generating segments.

As pointed out by Smith (1956), segmentation focuses on the demand in the market and allows for a more accurate and defined modification of products and services. It is important to acknowledge that the idea of segmentation is centred around the economic pricing theory (Dibb et al, 2002). Segmentation can aid if the efficiency of resource distribution as well as escalating the return on investment (Dibb et al, 2002).

Market segmentation is comprised of 3 steps namely, recognizing homogeneous segments inside of a greater heterogeneous fragment, assessing and deciding on one or numerous segments and breeding a plan most suitable for the exceptional needs and individualities of the target segment/s (Donovan et al, 1999). To follow through these steps, Yoram Wind (1978) has classified 4 rudimentary methods for segmenting markets. These methods are the a priori and cluster based or post hoc methods and the more recent methods being the flexible and componential techniques.

Green et al (1977) points out that a priori segmentation methods rely mostly on “either product specific variables like product usage or loyalty, or general customer characteristics in demographic terms”. Contrary to the a priori segmentation method, cluster based or post hoc segmentation methods contrast from the a priori methods by basing the segmentation off psycho-graphic characteristics such as needs, attitudes, and lifestyle or alternatively it is based off the benefits craved by consumers from the product or service (Tynan & Drayton, 1987). Additionally, the flexible segmentation method has a more dynamic approach to combat segmentation issues. The flexible segmentation methods permit marketers to advance and inspect a vast number of alternative segments which are comprised of a group of consumers who demonstrate a corresponding response to new tester products (Tynan & Drayton, 1987). Lastly, the componential segmentation method, suggested by Green et al (1977), allows for a prediction of what type of person could potentially be more receptive to a product or product feature in terms of demographic and psycho-graphic characteristics.

Brand positioning:

Positioning, according to Perreault & McCarthy (1999), “refers to how customers think about and/or present brands in a market”. Urban Hauser (1993), points out that positioning is in fact critical when launching a new product. When launching a new product, marketers must be sure that the product is able to meet the customers needs and additionally, must do it better than the businesses competition. Sagar, Singh & Arawal (2003) classified five essential components of brand positioning, namely “Brand Awareness, Brand Identity, Brand Image, Brand Personality and Brand Communication”

In regard to positioning, marketers need to cogitate 4 things namely the target market, in what was the product is unique from other competitors, the value of the product difference to the target market and the company’s aptitude in communicating the difference to the target market.

Positioning a new product in a multifaceted market can pose as a company’s most difficult decision however is it crucial. A vital aspect of a brands position in a product category is how alike, comparable or different the brands is seen in comparison with other brands in the product category (Sujan & Bettman, 1989). In order for a company to successfully position a brand, the business must have knowledge of how the brand is seen and interpreted by customers in relation to other brands within the same product class (Gwin & Gwin, 2003).

In regard to positioning a new brand, there are several routes a marketer can take. Firstly, the marketer can select to position the brand inside the whole market as a “differentiated” product (Dickson and Ginter, 1987). Using the differentiated positioning strategy, the brand is positioned in such a way that it portrays as having important attributes or product characteristics in common with other brands which will allow the brand to look superior on the differentiating or identifiable aspects. The second strategy is related to the differentiating strategy. However, this strategy attempts to generate a new submarket or niche for the blooming brand. This strategy is different to the first strategy in the sense that in this strategy’s goal is to set the brand apart whereas in the first the goal was to position the brand within the overall market (Sujan & Bettman, 1989). Alternatively, there is the subtyping strategy. Here the brand appears as a specialized product and is not perceived as a “prototypical” product in the market (Porter, 1988). It is important to keep in mind that in some situations, characteristics of the actual brand as well as situational factors will determine which positioning strategy is most suited for the brand (Sujan & Bettman, 1989)

Ethics in Marketing:

Importantly stated by Malhotra (1998 cited in Sagar et al, 2006), over the past few decades, ethics has been receiving an increasing amount of attention in marketing. Generally speaking, most marketers believe that in order to gain trust from your consumers it is important to conduct business ethically and with a moral commitment.

The occurrence of unethical behaviour has driven researchers to start exploring the role of ethics not only in today’s society but in businesses as well (Arli, 2017). Ethical judgement has been defined by Ngyuyen & Biderman (2008) as “a cognitive process in which an individual is to judge which course of action is morally right”.

Hunt & Vitell (1986 cited in Arias-Oliva et al, 2020) proposed a model which is a framework of ethical decision-making in which deontological and teleological assessment will conclude the decision makers ethical judgment. In the Hunt & Vitell model, deontologists have a belief that “certain features of the act itself other the value it brings into existence make and action or rule right” (Hunt & Vitell, 1986 cited in Arias-Oliva et al, 2020). On the other hand, teleologists “believe that there is one and only one basic or ultimate right-making characteristic, namely, comparative value of what is, probably will be, or is intended to be brough into being” (Frankena, 1963 cited in Arias-Oliva et al, 2020).

Distributive justice is a theory that proposes that the dissimilar way in which consumers get treated, when leading to damaging effects on their well-being, may produce an apparent lack of fairness (Laczniak, 1999). Targeting certain consumer segments breaches distributive justice when the outcome is marketers focusing benefits or enforcing costs on any specific segment.

Failure to take note of ethical issues associated with market segmentation and target marketing has left a grand financial cost on businesses (Cui & Choudhry, 2003). In order to prevent ethical battles in marketing, it is suggested by Cui & Choudhry (2003) to take into consideration the interests and ethical consequences in regard to the consumer before they implement their marketing plan.

Additionally, it is important to point out that not only targeting a segment can pose ethical consequences but also the exclusion of certain segments. This can consequently portray the company as controversial and come at a large cost (Harrington & Niehaus, 1998).

Generally speaking, segmentation and target marketing is ethical however some companies target harmful products to vulnerable consumers and this poses as an ethical breach. If a company has knowledge that a product has even the slightest chance of posing harmful to the consumer, it is deemed unethical of them to release that product (Lowry, 1998 cited in Cui & Choudhury, 2003).

Vulnerable consumers are usually in the groups of the elderly or children. The judicial system in the USA has described vulnerable consumers as “a group of people who, due to various idiosyncrasies, are sensitive and susceptible to the potential negative effects associated with using a particular product” (Stoltman, n.d. cited in Cui & Choudhry, 2003

Regarding discrimination which is stated by (Cui & Choudhry, 2003) as “the exclusion of certain consumers”, discrimination in marketing refers to disallowing certain groups of consumers access to certain products due to their racial or ethnic background, age or gender or any other physiognomies. Leaving a certain group of consumers out for any of the reasons listed before is classified as discrimination which is deemed highly unethical in the marketing world.

Lazniak & Murphy (1993) have developed several tests based off of existing marketing theories in order to test the ethicality of marketing decisions and practices. These tests include the motive task test, the consequence test and the justice test. The motive tests explore what the aim of the contemplated action is, being harmful or not. The consequence test ascertains whether or not any harm, cost or loss will come as a consequence to consumers from the contepleted action. Lastly, the justice test explores whether the intended actions discriminate against any groups.

Corporate social responsibility (CSR) in Marketing:

Corporate social responsibility does not have a set definition as ideas of exactly what corporate social responsibility actually is, is constantly changing (Sanclemente-Téllez (2017). This is because students and researchers are in a constant debate about the meaning and substance of CSR and on the other hand, companies have found a mutual understanding of how to go about business responsibly. However, we can categorize corporate social responsibility, according to Ethos (2016 cited in Sanclemente, 2017) as “ ethical and transparent relationship between a company and its public audiences, the establishment of goals in line with the sustainable development of society, the conservation of natural and environmental resources for future generations, respect for diversity and support for the reduction of social inequality”.

Corroll (1999) stated that this concept is crucial for all businesses and brands to take into consideration as it is centered around common matters in relation to companies relationship with society. As the years have been passing, CSR has been taken on board by many brands. This is because if a brand is seen as not being socially responsible, it can negatively impact the success of that brand tremendously (Marín, Ruiz and Rubio, 2009).

According to Marín et al, (2009) and Sen & Bhattacharya, (2001), a business taking into consideration their CSR can become conflicting when consumers want the highest quality at lower prices. But even with this conflict of interest, as stated by Sanclemente (2012), CSR is becoming a factor that makes up part of a company’s corporate strategy and can sometimes even give the company a competitive advantage.

Conclusion

As seen in the literature, segmentation and target are crucial steps to the success of a new product or brand success. We can conclude that a combination of segmentation, targeting and competitive positioning are frequently recognised as the stage of strategic marketing that brings advantages to both consumers and businesses (Klein, 2016). There are a handful of segmentation strategies that include a prior method, cluster based (or post hoc) method and the flexible segmentation method which has a more dynamic approach and lastly the componential segmentation method.

In regard to positioning, brand and product positioning, if done right, can allow the business to have a competitive advantage and stand out from the crowd. It is a crucial step however it can be one of the most challenging tasks a business has to face. When positioning, the 4 main factors marketers need to focus on is the target market, in what was the product is unique from other competitors, the value of the product difference to the target market and the company’s aptitude in communicating the difference to the target market.

Referring to ethics, the discussion on ethics has been researched more and more over the last few years. It is crucial for marketers to have good ethical judgement. If their ethical judgement does not prove substantial, this could affect the business very negatively and have a dark light shun onto the brand. Harmful products, vulnerable consumers and discrimination seem to be the three most researched ethicalities. Lazniak & Murphy (1993) have developed several tests in order to assess marketing decisions and these tests are in regard to the three ethicalities mentioned above. The tests are namely, motive task test, the consequence test and the justice test.

In regards to CSR, it is become absolutely crucial in this day and age for companies blend CSR within the corporate strategy. This is because consumers are becoming more prone to making responsible buying choices as well as the fact that a CSR company can in fact gain competitive advantage as well making it fundamental for any business.

Overall, segmentation, targeting and positioning are crucial for the strategic plan of the business. Ethics is a very important factor to take into consideration as marketers can make one wrong ethical move which can cost the company and the brand financially as well as intangibly. CSR is a concept that should be automatically adopted by all companies. It can allow a company to have a competitive advantage.

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